Preet Bharara, the United States Attorney for the Southern District of New York and

George Venizelos, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of charges against DAVID CORREA, a Bronx pharmacy owner, for his participation in a Medicaid fraud scheme involving the unlawful diversion of prescription drugs that had previously been dispensed to Medicaid recipients in the New York City area (“second-hand” drugs). Today’s charges are a result of the continuing investigation which led to the arrests on July 17, 2012 of dozens of people in connection with a $500 million Medicaid fraud scheme. CORREA was arrested this morning, and will be presented and arraigned in Manhattan federal court before U.S. Magistrate Judge Michael H. Dolinger later this afternoon.

Manhattan U.S. Attorney Preet Bharara said: “With today’s charges, we continue to target alleged black marketeers of second-hand drugs for prosecution. The alleged scheme enabled David Correa to defraud Medicaid and other insurance providers out of hundreds of thousands of dollars, while potentially compromising the health of very sick people in need of life-saving drugs. Our investigation remains very much ongoing.”

FBI Assistant Director-in-Charge George Venizelos said: “Today’s arrest is part of our ongoing investigation that previously uncovered a massive, multi-state drug diversion conspiracy. This scheme – including the defendant’s alleged conduct – defrauded Medicaid and, indirectly, U.S. taxpayers. It also threatened the health of the patients whose prescriptions were filled with diverted and repackaged medications. Health care fraud is a multibillion-dollar industry it is our mission to put out of business.”

The following allegations are based on the Complaint unsealed today in Manhattan federal court:

From at least 2010 through July 2012, CORREA conspired to purchase various second-hand prescription pills at heavily discounted prices from two individuals, who are now cooperating with the Government, in order to resell the pills at his pharmacy. The prescription drugs were designed to treat various illnesses, including HIV, schizophrenia, and asthma, and were originally dispensed to Medicaid recipients and private insurance beneficiaries in the New York City area, who then sold them into collection and distribution channels that ultimately ended at pharmacies, including the pharmacy CORREA owned. CORREA regularly purchased approximately 50 to 100 bottles of prescription drugs per month for $5,000 to $10,000 from the cooperators. He purchased the pills with cash in transactions outside of his pharmacy or in the parking lot of a nearby department store, where the drugs were delivered to him in plastic bags and beer boxes. By re-selling second-hand prescription pills as “new” to unsuspecting patients, and fraudulently seeking reimbursement from health care benefit programs, including Medicaid, CORREA could potentially reap hundreds of thousands of dollars in unlawful profits. For example, CORREA purchased HIV medication from the cooperators for $200 per bottle, and would have been reimbursed by Medicaid for more than $1,100 per bottle. So he stood to make more than $900 on each bottle of second-hand prescription medication he sold.

CORREA, 43, of Yonkers, New York, is charged with one count of conspiracy to commit health care fraud, which carries a maximum penalty of 10 years in prison, and one count of conspiracy to commit various violations of the Food, Drug and Cosmetic Act relating to the misbranding and adulteration of prescription drugs, which carries a maximum penalty of five years in prison.

Mr. Bharara praised the efforts of the FBI's Health Care Fraud Task Force and thanked the FBI for its work on the case.

The case is being prosecuted by the Office’s Organized Crime Unit. Assistant U.S. Attorneys Jason A. Masimore, Russell Capone, and Edward B. Diskant are in charge of the prosecution.

The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.